Tourism

The Dominican Republic is recognised in the region for its wide range of hotels, infrastructure and the sale of ‘all inclusive’ packages that have made tourism the main source of currency generator and employment in the economy.

54 TRADE POLICY FRAMEWORK: DOMINICAN REPUBLIC

Regulatory framework and incentives The traditional sun and beach offer led to the emergence and successful development of the tourist areas of Puerto Plata-Sosúa and Bávaro-Punta Cana in the 1980s and 1990s. In 2001 the Dominican Republic enacted a new law on tax incentives for the tourism sector, structuring tourism poles across the national territory and offering incentives for the development of a complementary offer as a means to diversification.

Law No. 158-01 for Tourism Development,⁷⁵ amended by Law 195-13, promotes the expansion of the tourism industry by granting large tax incentives for conducting tourism activities across the country for a period of 15 years. This law and its regulations grant an exemption of 100 per cent applicable to the following items: income tax, national and municipal taxes, property tax or taxes on assets. To apply these incentives, tourism projects must be approved by the Ministry of Tourism’s Council for Tourism Promotion (CONFOTUR). This law was extended and expanded in 2013 to extend benefits to up to 15 years from the moment the operation of the project⁷⁶ starts.

The tariff incentives apply only to the import of capital goods required for the implementation of the project, as long as local production is not of ‘sufficient quality’.

The regime also allows companies to deduct from their taxable net income up to 20 per cent of the investment made. In 2014, 33 companies benefited from the scheme of incentives for tourism development.

The priority for the sector’s development is to bring communities closer to tourism activities, meaning that greater economic benefits reach more people. For this purpose, since 2008 the number of so-called ‘tourist clusters’ has increased in order to promote non-traditional attractions in various provinces. There are currently 13 registered tourist clusters in the National Competitiveness Council (NCC) receiving support in designing strategic plans.⁷⁷ However, there is a lack of studies that measure their impact on the increase in visits.⁷⁸

The non-traditional tourism segments that are being developed include:

• Ecotourism. The Dominican Republic has a variety of ecological zones being promoted domestically and internationally as an experience that complements the traditional offer of the sun and beach holiday. Although no official statistics

are kept, the National Hotels and Restaurants Association (ASONAHORES)⁷⁹ keeps track of foreign visits to national parks, ecological reserves and protected areas. The figures collected between 2010-2014 show a progressive increase in foreign visitors, for a 22 per cent growth in the last year (see table 20).

• Golf tourism. The Dominican Republic was recognised by the International Association of Golf Tour Operators (IAGTO) as the top golf destination in the Caribbean and Latin America. According to industry reports, its contribution to the Dominican economy is about USD 200 million based on the arrival of 140,000 golfers in 2014, representing a growth of 10 per cent in comparison to the previous year.⁸⁰

• Second homes (real estate development).

Incentives for the tourism industry have enabled the design and development of real estate projects offered as second homes for foreigners. Although the Dominican Republic was portrayed as a cheap holiday destination for many years, it has managed to attract a high-level segment to invest in real estate projects such as Casa de Campo, Cap Cana, Punta Cana, Metro and Playa Grande.

• Cruise tourism. During 2014, the country received 435,500 tourists through the ports of Santo Domingo, La Romana and Samana.⁸¹

• Medical tourism. The Dominican Republic is trying to develop this market segment by promoting its health centres for high-demand procedures such as heart operations, gastric procedures and aesthetic and dental surgery. To this date, most people visiting the country in pursuit of these services have been Dominicans living abroad or with dual nationality. There is no statistical data about the impact of these activities on the trade balance.

Recent performance

The contribution of the tourism sector to the Dominican economy has maintained a steady growth rate, reaching the figure of USD 5,638.1 million in 2014, USD 574.6 million more than those received during 2013, according to figures from the Dominican Republic Central Bank. During 2014, hotel business activities in the country reached 68,840 rooms, equivalent to an occupancy rate of 74.8 per cent, reflecting an increase of 3.1 points compared to 2013.

Table 20. Foreign visitors to protected and biodiverse areas in the Dominican Republic, 2010-2014

Protected areas 2010 2011 2012 2013 2014 2014-2013

National parks

Armando Bermúdez 335 394 - 222 890 300.9

José del Carmen Ramírez - - - 0.0

Nalga de Maco - - - 0.0

Juan B. Pérez (Valle Nuevo) - - - 632 2 075 228.3

Sierra de Bahoruco (Pelempito) 917 - - 63 15 -76.2

Donald Dod (Bahoruco) - - 110 - - 0.0

P.N. Los Haitises 17 888 17 888 3 152 - 22 103 100.0

Montecristi (Estero Hondo) 14 862 - 3 100 - 35 248 100.0

Parque Nacional del Este 385 160 576 647 557 256 529 546 606 799 14.6

Submarino La Caleta - - 9 109 4 430 3 964.2

Jaragua National Park 1 337 2 365 1 283 87 912 5,108 -94.2

Isla Cabritos / Lago Enriquillo 1 251 636 956 989 13 -98.7

Cabo Francés Viejo 1 900 - - 800 - -100.0

Histórico La Vega Vieja - - - 0.0

Histórico La Isabela - - - 0.0

Subtotal 423 650 597 930 565 866 620 273 676 681 9.1

Scientific reserves

Villa Elisa - - - 0.0

Ébano Verde 51 - 71 63 - -100.0

Loma Quita Espuela 39 21 - 56 - -100.0

Laguna Redonda y Limón 200 - - - 99 100.0

Loma de Guaconejo 13 - 46 - - 0.0

Subtotal 303 21 117 119 99 -16.8

Natural monuments

Isabel de Torres - - - 0.0

Bahía de Las Calderas 20 - - 294 448 52.4

Isla Catalina 37 534 85 646 91 865 88 810 124 027 39.7

Cabarete y G. (El Choco) 871 432 - - 1 282 100.0

Pico Diego de Ocampo 40 40 - - - 0.0

Albufera de Mamón 230 154 - 613 450 -26.6

Saltos de Damajagua 13 583 882 38 573 39 455 40 274 2.1

Salto del Limón (Samaná) 30 948 29 424 3 572 41 965 60 719 44.7

Salto de Jimenoa (Bol. 2010 - - 1 538 12 559 2 101 -83.3

Subtotal 83 226 116 578 135 548 183 696 229 301 24.8

56 TRADE POLICY FRAMEWORK: DOMINICAN REPUBLIC

Source: Statistics generated by the Ministry of Environment’s Department of Protected Areas, 2014.

Protected areas 2010 2011 2012 2013 2014 2014-2013

Anthropological reserves

Subtotal 13 977 13 972 21 550 29 531 94 140 218.8

Urban parks

Los Tres Ojos 83 318 89 994 94 508 94 228 137 047 45.4

Urban parks subtotal 83 318 89 994 94 508 94 228 137 047 45.4

Total 620 737 836 719 841 254 954 052 1 161 780 21.8

Table 20. Foreign visitors to protected and biodiverse areas in the Dominican Republic, 2010-2014 (cont’d)

According to estimates by the World Economic Forum in its ‘2015 Travel and Tourism Competitiveness Index’, the Dominican Republic occupies position 81 out of 144 countries analysed through the performance of sub-indexes: i) an enabling environment, ii) policies and factors that favour travel and tourism, iii) infrastructure and iv) natural and cultural resources.

Challenges and Opportunities

Tourism will continue to be an important sector of the Dominican economy despite the increase in regional competition due to the resumption of relations between Cuba and the United States. The main challenge is overcoming the differences between the all-inclusive resorts and the rest of the country, to promote experiences with a higher added value where the tourist is integrated into the life of Dominican communities and cities. Efforts to diversify supply attracting other market segments and expanding visitor experiences should be continued and deepened, with greater inter-institutional coordination and collaboration between the Ministries of Culture, Tourism, Environment and CEI-RD.

Regarding ecotourism, it is worth noting that in 2010 a National Strategy for Ecotourism Development

was designed by the Ministries of Tourism and Environment, which contains detailed objectives and activities. However, this guide is not being implemented and the interministerial coordination has been discontinued. Nevertheless, the Ministry of Tourism has continued to develop initiatives such as:

The Tourism Technical Roundtable in collaboration with JICA; the promotion of ecotourism through e-marketing; national promotion campaigns, the plan for revitalising the colonial city, and reconstruction of access roads leading to tourist attractions.⁸² This has increased local tourism and foreign visits to natural and environmental reserves.

Concerning medical tourism, the recent formation of the Dominican Association of Health Tourism⁸³ brings together twelve accredited professional medical services and specialist centres and is already recognised by European insurance companies. This confirms the growing tendency to provide medical services for foreigners, including referrals from other countries in the region.⁸⁴

According to the World Medical Tourism Association (MTA), medical services represent more than 60 billion dollars in annual sales with an estimated annual growth of 30 per cent, generating 2.5 per cent of total

air travel. To maximise potential benefits from this service trade, the Dominican Republic must better manage endemic diseases (dengue, cholera, malaria) that threaten the country’s projection as a reliable place to receive medical treatment.

There are still opportunities that have not been explored enough such as multi-destination tourism to multiply tourism to the Caribbean region, as in the case of European and some Asian countries that offer package tours to visit several countries. The opening of trade and diplomatic relations between Cuba and the United States of America may result in an opportunity to turn a competitor into a strategic ally.

Moreover, despite deepening the trade framework with CARICOM countries, regional initiatives are still deficient. This is the case, for example, with developing multi-destination tourism and improving coordination with regard to visa requirements, facilities and other complementary measures to promote niche multi-destination opportunities, including those related to yacht and sailboat tourism. Developing schemes to promote multi-destination visits within the island could also be of interest, for instance to attract segments interested in discovering Haiti’s cultural attractions.

6.3. Call centres and back offices